CMH Homes, Inc. v. Bob's Home Service, LLC et al
Filing
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MEMORANDUM OPINION & ORDER granting the 1 PETITION to Confirm the Arbitration Award; granting the 13 MOTION for Default Judgment; and CONFIRMS the arbitrator's award of $1,165,289.20 plus interest accruing at 3% beginning on 7/1/2016 and $412,088.36 plus interest accruing at 3% beginning on 11/9/2016. Signed by Judge Joseph R. Goodwin on 2/23/2017. (cc: counsel of record; any unrepresented party) (taq)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION
CMH HOMES, INC.
Petitioner,
v.
CIVIL ACTION NO. 2:16-cv-10696
BOB’S HOME SERVICES, LLC., et al.,
Respondents.
MEMORANDUM OPINION & ORDER
Pending before the court are the plaintiff CMH Homes, Inc.’s Petition to
Confirm Arbitration Award and for Entry of Judgment [ECF No. 1] and Motion for
Entry of Default Judgment [ECF No. 13]. The defendants did not respond to the
Motions and have not otherwise made an appearance in this matter. For the reasons
set forth below, the Petition to Confirm the Arbitration Award is GRANTED and the
Motion for Default Judgment is GRANTED.
I.
BACKGROUND
In August 2002, the defendants Bob’s Home Service, LLC and Robert
Southworth entered into an Independent Contractor Application and Agreement
[ECF No. 1-1] (“Agreement”) with the plaintiff CMH Homes, Inc. (“CMH”) where the
defendants agreed to construct CMH’s manufactured homes for purchasers.
According to the Agreement, the parties were to submit all disputes to binding
arbitration, and further, the defendants were to defend and indemnify CMH should
CMH be sued for the defendants’ actions or negligence. See Pet. Confirm Arb. Award
Ex. 1, at 2 ¶¶ 6,7 [ECF No. 1-1] (“Agreement”).
In 2012, two purchasers sued CMH for improper set up of their manufactured
home and were awarded a judgment. In October 2015, CMH filed an arbitration claim
against the defendants seeking recovery of that judgment and attorney’s fees
associated with its litigation of the claim in accordance with the defense and
indemnity provision of the Agreement. See Pet. Confirm Arb. Award Ex. 3 [ECF No.
1-3] (“Demand for Arbitration”). CMH also sought recovery of attorney’s fees in
bringing the arbitration. See id. After an evidentiary hearing, Arbitrator Peter Wellin
for the American Arbitration Association entered a “Partial Final Decision and
Award” on June 13, 2016, awarding CMH $1,165,289.20 jointly and severally against
the defendants. See Pet. Confirm Arb. Award Ex. 4, at 7–8 [ECF No. 1-4] (“Partial
Final Award”). Later, on October 17, 2016, Wellin issued a “Final Decision and
Award,” awarding CMH $412,088.36 jointly and severally against the defendants, for
attorney’s fees and expenses in bringing the arbitration proceeding. See Pet. Confirm
Arb. Award Ex. 5, at 5 [ECF No. 1-5] (“Final Award”). In total, Wellin issued CMH
an award of $1,577,377.56 jointly and severally against the defendants.
On November 8, 2016, the plaintiff CMH filed a Petition to Confirm Arbitration
Award and for Entry of Judgment [ECF No. 1] against the defendants for breach of
the parties’ Agreement in the amount of $1,577,377.56 plus post-award interest and
attorney’s fees. Pet. Confirm Arb. Award 5–6. The defendants were served on
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December 21, 2016, but, to date, have failed to file any response or challenge to CMH’s
claim. On January 13, 2017, the Clerk of the Court entered an Order of Default [ECF
No. 12] against the defendants, pursuant to Federal Rule of Civil Procedure 55(a). On
January 23, 2017, CMH filed a Motion for Entry of Default Judgment [ECF No. 13].
The Motion for Entry of Default Judgment requests that the Court confirm the
arbitration award of $1,577,377.56 and seeks post-judgement interest. The
defendants did not respond to the Motions.
II.
LEGAL STANDARD
“Rule 55 of the Federal Rules of Civil Procedure authorizes the entry of a
default judgment when a defendant fails to plead or otherwise defend in accordance
with the Rules.” United States v. Moradi, 673 F.2d 725, 727 (4th Cir. 1982) (citations
omitted). Despite the Rules’ preference for disposition of claims on the merits, “trial
judges are vested with discretion, which must be liberally exercised, in entering such
judgments and in providing relief therefrom.” Id. (citations omitted). “When default
judgment is sought with respect to an application for confirmation of an arbitration
award, the plaintiff ‘must show that it is entitled to confirmation of the arbitration
award as a matter of law.’” Choice Hotels Int’l, Inc. v. Austin Area Hosp., No. TDC15-0516, 2015 WL 6123523, at *1 (D. Md. Oct. 14, 2015) (quoting United Comty. Bank
v. Arruarana, No. 1:10–cv–248, 2011 WL 2748722, at *2 (W.D.N.C. July 13, 2011)).
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III.
DISCUSSION
The Federal Arbitration Act provides, in part:
[A]t any time within one year after the award is made any party to
the arbitration may apply to the court so specified for an order
confirming the award, and thereupon the court must grant such an
order unless the award is vacated, modified, or corrected as
prescribed in sections 10 and 11 of this title. If no court is specified
in the agreement of the parties, then such application may be made
to the United States court in and for the district within which such
award was made.
9 U.S.C. § 9. Here, the Agreement contains an arbitration clause stating that “all
resolutions of any conflicts arising under this [A]greement between Contractor and
CMH will take place in conjunction with a binding arbitration process.” Agreement ¶
6. The Agreement does not specify what court may enter judgment on the award, but
the arbitration evidentiary hearings were conducted in Charleston, West Virginia,
within this district. Final Award 4. CMH has filed with the court all of the necessary
documents as required by 9 U.S.C. § 13. Additionally, CMH filed for confirmation
within a year after the arbitration award was issued. The parties are diverse and the
amount in controversy is more than $75,000 as required by 28 U.S.C. § 1332(a). Thus,
the court has jurisdiction to confirm the arbitration award.
The Fourth Circuit has articulated the standard for review of an arbitration
award:
Review of an arbitrator’s award is severely circumscribed. Indeed, the
scope of review of an arbitrator’s valuation decision is among the
narrowest known at law because to allow full scrutiny of such awards
would frustrate the purpose of having arbitration at all—the quick
resolution of disputes and the avoidance of the expense and delay
associated with litigation. Jih v. Long & Foster Real Estate, Inc., 800 F.
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Supp. 312, 317 (D. Md. 1992). Federal courts may vacate an arbitration
award only upon a showing of one of the grounds listed in the Federal
Arbitration Act [(“FAA”)], or if the arbitrator acted in manifest disregard
of law. In re A.H. Robins Co., Inc., 197 B.R. 513, 516 (E.D. Va.1994).
Apex Plumbing Supply, Inc. v. U.S. Supply Co., 142 F.3d 188, 193 (4th Cir. 1998)
(footnotes omitted). “If there is a valid contract between the parties providing for
arbitration, and if the dispute resolved in the arbitration was within the scope of the
arbitration clause, then substantive review is limited to those grounds set forth in §
10 of the Federal Arbitration Act.” Choice Hotels Int’l, Inc. v. Jai Shree Navdurga,
LLC, No. DKC 11-2893, 2012 WL 5995248, at *3 (D. Md. Nov. 29, 2012). Section 10(a)
of the FAA allows vacatur only
(1) where the award was procured by corruption, fraud, or undue means;
(2) where there was evident partiality or corruption in the arbitrators,
or either of them;
(3) where the arbitrators were guilty of misconduct in refusing to
postpone the hearing, upon sufficient cause shown, or in refusing to hear
evidence pertinent and material to the controversy; or of any other
misbehavior by which the rights of any party have been prejudiced; or
(4) where the arbitrators exceeded their powers, or so imperfectly
executed them that a mutual, final, and definite award upon the subject
matter submitted was not made.
9 U.S.C. § 10(a).
In this case, CMH established that there was a valid contract between the
parties requiring arbitration of “any conflicts arising under this agreement” and that
its demand for arbitration arose from the defendants’ breach of the indemnity and
defense provision of the Agreement. See Agreement ¶ 6; Partial Final Award 2–3;
Final Award 2–5. The court is therefore satisfied that the claims resolved at
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arbitration are within the scope of the parties’ Agreement. Furthermore, although
the defendants were served in this case, the defendants have failed to answer CMH’s
Petition or otherwise make a showing of any grounds for vacating the arbitration
award. Accordingly, the Court GRANTS the Motion for Default Judgment [ECF No.
13] and the Petition to Confirm Arbitration Award [ECF No. 1] and CONFIRMS the
arbitrator’s award of $1,165,289.20 plus interest accruing at 3% beginning on July 1,
2016, and $412,088.36 plus interest accruing at 3% beginning on November 9, 2016.
See Partial Final Award 8; Final Award 5.
IV.
CONCLUSION
For the foregoing reasons, the Motion for Default Judgment [ECF No. 13] and
the Petition to Confirm Arbitration Award [ECF No. 1] are GRANTED. A separate
order will follow entering default judgment in the amount of $1,165,289.20 plus
interest accruing at 3% beginning on July 1, 2016, and $412,088.36 plus interest
accruing at 3% beginning on November 9, 2016.
The court DIRECTS the Clerk to send a copy of this Order to counsel of record
and any unrepresented party.
ENTER:
February 23, 2017
_________________________________________
JOSEPH R. GOODWIN
UNITED STATES DISTRICT JUDGE
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